Debt Settlement Pros and Cons

Debt Settlement Pros and Cons. This article may be a bit satirical and exaggerated, but any consumer that has found themselves in the unfortunate situation to have to get some straight answers about the different debt relief options available can certainly appreciate how this article closely mimics reality.

Ask a Credit Counselor and a Debt Settlement Representative about the pros and cons of debt settlement. What are you supposed to think when they each provide answers that are basically 180 degrees apart? Compare them point for point. It’s only funny cause it is true.

Debt Settlement Pros and Cons

Debt Settlement Pros and ConsCredit Counselor:




1. Credit is completely destroyed

2. You will be sued

3. Creditors will call you at all hours of the day and night

4. Creditors will call your family, friends, neighbors, boss, high school sweetheart, 3rd grade teacher and even your mailman

5. All debt settlement companies are scams

6. Settlement is worse than bankruptcy

7. Settlement never works

8. The IRS will hunt you down after you settle a debt

9. Debt Settlement isn’t ethical

10. Fees that would make a pay day lender jealous

11. They pretend to offer you a low monthly payment, but they are not giving any of that money to your creditors

12. Since the creditors aren’t getting paid for many years, they will sue you

13. In the end settlement will cost you more than the entire debt you have now

14. Settlement companies will bleed you dry for fees and then force you into bankruptcy

15. Don’t Call a Debt Settlement Representative because they will just lie to you to make a sale

Pros and Cons of Debt SettlementDebt Settlement Representative:




1. Credit will go slightly negative but can be fixed very quickly

2. We protect you from lawsuits

3. We stop all phone calls and none of your creditors will bother you

4. If a creditor calls anyone or steps out of line we will sue them for an FDCPA violation and you get 1000 dollars

5. We have settled millions of dollars in debt for our clients and are endorsed by every single impressive logo we could find on the web

6. Settlement is a much better alternative to bankruptcy

7. All creditors settle debts

8. You may have to pay a little bit of tax on the forgiven debt, but you can just ask for a waiver on that

9. Debt settlement is a very ethical solution because you pay back what you can afford

10. Our fees are very low and rolled into your easy monthly payment for your convenience of course

11. We will cut your monthly payments in half and provide you the most relief

12. We offer easy monthly payments to pay back only half your debt in 3 to 5 years

13. We will save you a gazillian dollars

14. We are your only option to avoid bankruptcy

15. Don’t call a credit counselor because they will just lie to you to make a sale

Is it any wonder that consumers are simply lost when it comes to getting consistent information about resolving debt issues? The main problem in the debt relief industry or practically any industry for that matter, is that advice tends to “lean toward the green”. Meaning, advice tends to follow the money.

If the person offering advice is getting paid to sell Credit Counseling, they are not likely going to speak highly of debt settlement and vice versa. I am not saying that many of these credit counselors and debt settlement representatives don’t want to honestly help their clients, but there is just an inherent bias that cannot be ruled out.

Watching the credit counseling and debt settlement industries going at each other is like the Hatfields and McCoys. They just flat out don’t like each other and that industry culture permeates into their consumer advice to the detriment of their clients unfortunately.

Shameless Plug

Shameless Plug Alert

So, with that being said, what are the debt settlement pros and cons? Well, the reality is that it is a mixture of the above. How much of one vs the other will actually depend on a consumers specific situation. There is no stand alone better solution.  For some, a credit counseling approach offers the most benefit, for others a settlement approach will make sense, and for others still, neither one will work.

So how can you get straight answers about your debt relief options? Start by talking to someone that gets paid to give you those straight answers you are looking for. Not to toot my own horn or anything, but TOOT TOOT!

If you would instead prefer to talk to a respectable debt settlement company directly, there are a few companies that I have confidence in and have a long track record of doing right by consumers. One such company is Donaldson Williams. With over a 7 year track record, an A rating from the BBB, and a No Fee until they settle your debt policy, they are one of the few companies I can recommend.


*This article was a featured story at How To Get Out Of Debt.

About Damon Day

As a Debt Coach and a Financial Advocate, I have saved my clients Millions of Dollars by exposing the debt relief scams that other consumers fall victim to. I work directly for my clients to create custom debt relief strategies based on their own unique circumstances. Consumers who speak with me first, come out far ahead of those who don't, every single time. Guaranteed. +Damon Day

17 Responses to “Debt Settlement Pros and Cons”

Read below or add a comment...

  1. Financial Manager (1 comments) says:

    Isn’t it better to just keep yourself out of debt in the first place? I mean, there are exceptions to every statement, but I truly believe that most people in major debt are there because of careless expenditures. People need to realize that they are not entitled to all the purchases they make on credit. Resolution of debt starts with personal responsibility.

    • Damon (132 comments) says:

      Yes, of course that would be better. However, once we are beyond that there certainly needs to be some solutions available for consumers that can make sense. They shouldn’t be easy or fun, but they should provide a path back to financial solvency for consumers who have taken a wrong turn because of either bad choices or circumstances.

  2. Charles (2 comments) says:

    Nice turn around Damon. Really good imagination. Hahaha! But still, debts are not good unless you really need it for a sure earning investment. Right? But debts that can really choke you to death is something that can ruin a person’s life.

  3. Xerxes (1 comments) says:

    Yes it is much way to avoid such debt in the first place. But you cannot get away with having zeroed on this fact. People are always short. People are impulsive, people get to adjust then risk having debts in return for instant purchasing. This leads to the fact that most people are in debt.
    Sir Damon has the needed tips for one to help on taking the risks at a minimal stage where you can “budget” the expenses.

    Sir Damon rocks!

  4. Meguella (1 comments) says:

    I work for a debt settlement company, and this article hit the nail right on the head. The settlement process isn’t always the best option for some people, but it is a way out. I personally had my fair share of debt before I became employed with my company, and never realized debt settlement is an option, when making minimum payments is getting you nowhere. Thank you for this article, I am happy to hear someone’s opinion on debt settlement, and include the positive AND negative effects. There certainly are a lot of bad companies out there doing unethical, dishonest work, and ruining the legitimate companies chances of ever helping the everyday consumer.

    • Damon (132 comments) says:

      Hello Meguella,

      Thanks for stopping by. You are right, there are quite a bit of unethical and dishonest programs out there. Consumers really need to keep their guard up.

  5. Jeffry (2 comments) says:

    I didn’t think that Credit Counselors actually contacted the client’s creditors. I thought they just gave advice on getting out debt as fast as possible. I’m a little lost here. I know debt settlement reps and companies actually work with the creditors…help me out here please.

    • Damon (132 comments) says:

      Hello Jeffry,
      No, a credit counselor working for a consumer credit counseling program has agreements in place with most all major creditors that allows them to lower the interest rates for their clients.

      The reality is that a credit counseling organization works much closer with creditors than debt settlement companies do.

      • Jeffry (2 comments) says:

        I see. Well, thanks for the tips. If I ever get into a spot where I can’t manage the debt on my own, I’ll have a little better understanding.

  6. AndreaM83 (1 comments) says:

    I went through a debt settlement company and recently completed the process. I obviously can not speak for other consumers, but my particular situation worked out very favorably for me. I saved about 70% of my debts (paid about $16,000 on the $53,000 I owed when the process started). I was natually hesitant to go the debt settlement route, but after carefully researching some companies I found one that I was comfortable with. They were very upfront with me about the potential pitfalls of debt settlement, which I appreciated. Luckily, my program went smoothly….no lawsuits, very little creditor contact, etc.

    As a successful debt settlement story, I would encourage people to do their homework if they are interested in the process. If anyone would like the name of the company I used, let me know.

    • Damon (132 comments) says:

      Hello Andrea,

      Thanks for coming on to share your story. After researching several companies which one did you ultimately select to help you?

  7. Jonathan (14 comments) says:

    Totally agree that debt settlement is a nightmare situation, avoid it at all costs and try to opt for other options first. I can’t believe how many scam companies there are out there that are happy to take you’re money but will do little to help your circumstances

  8. Jonny Debt (5 comments) says:

    Creditors have few morals and I’ve known them to ring faily members to chase debts from people who owe them money. They will do whatever it takes to embarras, bully or threaten people into paying their bills.

    • Damon (132 comments) says:

      Hey Jonny,
      Sometimes that is certainly true. Some creditors don’t cross the line into harassment though. So the good news is they aren’t all bad.

  9. Jonathan G (1 comments) says:

    I agree that there is a lot of misinformation going around about debt settlement agencies. While settlements may be an option for some consumers to resolve their debts they often do more harm than good. As a credit counselor my opinion is that settlement firms should generally be avoided. I have written an article about some of the predicaments that my clients have come to me with after attempting to use a settlement firms. I think it would be worth reviewing if you’re considering a settlement program as opposed to other options to resolve your debts.

    Hope you find it useful.

    • Damon (132 comments) says:

      Hello Jonathan, yes, I agree, most settlement companies do more harm than good, but then again, so do most credit counseling agencies.

      I see just as many clients that come to me with problems that a credit counselor put them in then debt settlement companies.

      The big problem with the industry is that every program is bias toward their own program. Credit Counselors sell credit counseling and tell people that debt settlement will ruin their life and bankruptcy should be avoided.

      Debt settlement companies tell consumers that credit counseling won’t really help and bankruptcy is evil.

      And of course, most bankruptcy attorneys simply look to enroll the consumer into bankruptcy.

      So while all programs have good points and bad, the biggest issue is that a consumer can never get straight answers in order to make good decisions.